Hormel Foods (HRL)

Jim Snee Chairman, President, Chief Executive Officer
Jim Sheehan Executive Vice President, Chief Financial Officer
Nathan Annis Director, Investor Relations
Erica Eiler Oppenheimer
Ben Bienvenu Stephens Inc.
Heather Jones Heather Jones Research
Adam Samuelson Goldman Sachs
Eric Larson Buckingham Research Group
Robert Moskow Credit Suisse
Thomas Palmer JP Morgan
Rebecca Scheuneman Morningstar
Call transcript
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Welcome to the Hormel Foods third quarter 2019 earnings release conference call. At this time, all participants are in a listen-only mode.

As a reminder, this conference is being recorded Thursday, August 22, 2019.

I’d now like to turn the conference over to Nathan Annis, Director of Investor Relations. Please go ahead, Mr. Annis.

Nathan Annis

around the fiscal conference results XXXX. before market to third for this Welcome the of Eastern. quarter We opened morning. Hormel call Foods the morning Good am X:XX released our

you find on Investors can section. not release, under at it a of our copy If the did you hormelfoods.com website the receive

Jim a Vice On today Snee, Jim and of is our Chief President performance President Jim and Officer, provide Executive and Chairman Chief Snee Financial each segment’s Officer. call review Sheehan, of Executive will the Board, the for questions for for detailed the of XXXX. The assumptions quarter and relating outlook. opened results be following provide will Jim remainder line and our will our to Sheehan’s outlook Jim remarks. financial further Sheehan

other question to the limit a courtesy with follow-up. analysts, one to yourself please one As

you you additional queue. welcome back get questions, to in the have If are

be is this today access is replay code of year. Central An website to will and archived Time. our call XXX-XXX-XXXX The Standard am for audio beginning number one XXXXXXX. be also dial-in will at posted XX:XX the It and available

need started, Harbor we statement. to I reference the get Before Safe

be April Some expressed XXXX statements results to or from comments materially may by on and XX, details. those the company’s website. to accessed in can of XX our the forward-looking making. actual ended differ for made for today will the Please be quarter we the XX will implied refer in be Pages It XX-Q Form more

Discussion corporate we organic release note to press non-GAAP will impact of of website. organic Please to volume call, sales as excluding during non-GAAP company’s CytoSport information that by investors is Additionally, detailed our divestiture. and operating results the the located these please with a sales. non-GAAP note refer our the on better understanding uses provide company volume results and on the in performance our

to the I call will over Jim turn Snee. now

Jim Snee

our unique Thank Good is an company, uncommon Foods Nathan. industry. you Hormel in morning everyone.

through able is and dynamic channels, build management conditions, to service, agile direct have portfolio volatile team market sales force balanced We innovations to and businesses, retail, who a help a that and sold to deli quickly tenured relationships the a the products an industry-leading to food adjust branded international a able customers efficient their for marketplace, reputation is supply bringing chain. increasingly our grow and and maintain to of

financial us to growth organically position strong. enables through Our and strategic business fundamentals and This remain acquisitions. deliver

leadership take uncertainty position global the navigate to perspective a conditions. near-term a market Our as food related as company branded we us allows to long-term various

make refrigerated results line per excellent from earnings the foods CytoSport. in an uncommon. expectations. a X% by declines Pre-tax $X.XX, demonstrate This declined Net that quarter last to grew announced to of grocery organic The profits decline tax as were results per our earnings products. sales with morning rate. of offset decline on divestiture decrease many us X%. qualities a sales share of a On flat but we third year volume basis, due of from X% higher the Our X% compared driven in was share

team. value-added the sales, net accomplishment record improvement. quarter foods in by was increased driven sales profits value-added volume X%. increased decline third profit value-added an profit Segment food profit. role by Refrigerated X% refrigerated the segments, on commodity played XX% operational quite the smaller Lower at a Looking higher and profit, achieved sales, profitability. This a segment costs foods and higher of refrigerated

also service precooked making delivers capacity filling continuously Fontanini bacon Hormel industry. are brands solid such to The as organization had Our Hormel Bacon to grow I their innovation Old Fire continues food the with to for leverage products. They and the impressed Smokehouse. food remain service Braised, Natural direct Fontanini, Hormel X, division sales progress Choice, quarter. team excellent and this the another team new

remain our ability confident We Applegate to in brand. grow the very

service point providers, healthcare patrons. Applegate appreciate difference colleges food universities. and brand making the great These the team operators their with needs Our of of Applegate growing provides progress is for the

filling segment ways Blend to the For as need college burger for example, and protein and more university look a is students enjoy alternative in organic the Applegate products. natural

Hormel new division vision to continues pursue create retailers The its solutions the the future. of deli of deli helping

more While are are category such grab-and-go Consumer as the convenient growth, Hormel of products like changing prepared looking margin foods our products as decline. of Gatherings solid lower party behind-the-glass Columbus charcuterie. Columbus shoppers brand preferences line authentic and to portfolio and our continues showing are the for trays our options

term the behind-the-glass away long shift ongoing the consumer, the our near over the term. company benefits sales While volume, category a and to the presents from challenge this shift I’m confident retailer,

category As increases across see input value-added we increases of products to branded price many our started in we leaders, when took costs. sharp

input we high categories expect. During retail realigned costs materialize we forecasted, we not in higher many to closely which commodity than the to more third our others market. quarter, higher match would typically were priced did pricing relative as the elasticity When created

conditions. be volatile Once products, growth again, by refrigerated The growth driven to ability foods has of value-added demonstrated disciplined and pricing, this on term market clear long segment generate focus a an in innovation. continues to

in to its have While the demonstrates foods focus deliver refrigerated results, costs continue sustainable and will rapid we growth. create changes how quarterly in seen alignment can input clarity, noise

by sales due costs business, avocado while Guacamole Organic in butter earnings declined our for Segment spreads X%. divestiture peanut volume business. from CytoSport, XX% the volume XX% to increased higher and lower sales declined Holy declined Skippy products profit our of Grocery year-over-year XX%.

prices. California is actively will be quarter. over XXX% driving Similar the to the increased the A avocado and in as MegaMex is team harvested new pricing September. we experienced In managing promotional demand the what costs strong XXXX, response, market are tactics avocado smaller during evaluating crop global crop and by during

brand continue As and advertising focus innovation. effective we on through Guacamole Holy the brand always, to growing building,

competitor’s to pricing. Our Skippy response last by business price took we a spreads deflationary the impacted was in negatively decline quarter

brand management, effective we growth we on the in advertising, While disappointed category Skippy innovation. continued revenue and the dynamic, are building through remain focused

A Minis consumer with PB&Jelly has launch key and the versatile, category. deliver acceptance. acquiring is retailer portable, met sold This families. perfect was and to reason to The the in item innovative of busy today’s out-of-the-jar for been Skippy section Skippy brand for innovation frozen the recent great

distribution and reached now line. product continue of repeat improve. national the this have and to rates optimistic trial We very I’m success about

will as While Many Hormel the performed Skippy Moore, Bacon quarter. brands spreads quarter, all fully year. had Dinty Compleats center Black full products a Label grocery brands Spam, growth store for the of and of Bits, a I great difficult expect of portfolio Holy Guacamole and balance such had well. Herdez, all the show our these

volume decreased X% Segment sales store while X% profits sales. lower turkey Jennie-O value-added decreased declined X%. due to

distribution. retail discussed we we last to quarter, As reactivating gain back promotional activity are lost

lap While we had a we distribution few wins. continue have small to losses,

We expect process of the distribution will regaining well go into XXXX.

for materially market last experienced have From perspective, the at to in we are but the changes to JOTS ideas the through business. to prices new elevated several restoring not parts few changes of we levels. organization industry placements Over quarter. lower last since from continue see Turkey company have who and made Jennie-O bring cold bold leaders an this other storage remains months, charged with growth

Organic segment up flat. were profit volume X%. X% and was sales and volume sales International increased while

affected Skippy strong uncertainty African food from continue and driven China and to in brands. to be global by tariffs. in swine related Exports by to results team delivered Spam business our service Our trade the fever addition growth

markets start prior our Similar China. related would is protein uncertainty to view we in second On commodity higher African quarter, of the outbreak for to the fever. that to the discussed from our industry swine call, the on demand increase quarter pork

seen not higher continue. prices, consistently have higher expect that have seen trend volatility and we While we to

As that appropriate markets as input the eventually time, African short fever, margin necessary we will At increases manage create the profitability, swine increase. we are which evaluate of still cost impact increases. pricing term lags generally the confident compression price to will global may our pork we take

all we per into are Taking reaffirming to share. full-year of our guidance $X.XX factors $X.XX account,

of increased to end previously and as have the reaffirming $XX given full expect the our to be in changing to year I we range adjust market but outlook. deliver the market are our expected. prices ability $X.X billion We sales also to guidance not have teams’ on billion lower of confidence our conditions

At our this Jim relating the in Sheehan to of fiscal remainder to call XXXX. guidance, and turn assumptions will financial to earnings information the our quarter over discuss the time, addition for I to key

Jim Sheehan

higher store. Thank due you earnings was in third growth rate. Jim. sales morning. $XXX Pre-tax for were per of last tax three segments turkey and quarter earnings diluted was X% the Net Net business Organic billion. declines Good to year. were million, $X.XX, X% a from earnings down Jennie-O were at sales share four effective offset million $XXX by the up $X.X

rate year. options by lapping primarily quarter. the tax estimate the rate the The The from up exercised rate year was XX.X% lower of in significant from of we in full the be now last to to XX.X%, because one-time the anticipated increase XX.X% tax is re-measuring expected previous higher liability of deferred was and between XX.X%. volume tax driven than tax the gain The

was sales and the last X.X% CytoSport SG&A expenses. of The lower year. excluding X.X% transaction employee-related to the of advertising to impact decline compared due was

of lower declined million, investments Advertising to million CytoSport. expenses option year. to expense the Advertising and down million the $XX the in $XX driven interest $XX due quarter from primarily Net expected year. sale lower stock was universal by unallocated be prior for last expense are

were compared performance. XX.X% in to to XX.X% foods and led the refrigerated margins Operating SG&A improved results Strong favorable year. last

build million, material from building levels input raw as flow as mitigate we some of volatility the down of of XX%. should was cost inventory working rise. This thoughtful was driver primary markets $XXX in anticipation approach capital cash to increased higher Year-to-date inventory costs. operations The

For capital $XXX last million were million year. compared to the $XX expenditures quarter,

approximately in spend. changes spend scope the project to capital in Weather expect XXXX. We million projected delays impacted $XXX and

of paid Share our XX rate prior effective shares. per annual X.X the quarterly We year. $XXX completes million representing share, This XXXth year XX% of consecutive repurchases dividends. were over in consecutive million, at $X.XX increase the XXst dividend an quarter August the a

offset exercises We internal repurchase from dilution stock based will stock option to and our on continue to valuation.

investments and to strategic fund strong business. remains sheet balance Our the us grow to allows

average. Turkey turkey for XX% are Fundamentals storage industry mixed. five-year above the remain are Breast prices down were quarter, last expected $X last five-year the similar remain decline Feed $X.XX prior in meat above to a average. but year. placements and October costs above last were birds Whole cold below Avocado through year-to-date. Bolt remained prices from last are X% quarter above year. to year. and increase the for year the year the is but the

Mexican weeks. We as harvested is have the visibility the in crop better next will few

between traded quarter. trade during global to dynamics, we by wide quarter the uncertainty prices costs and of quarter markets dramatically XX%. level. before $XX Cold briefly markets. hundredweight significantly input caused $XX and hog $XX The USDA never storage hundredweight. between $XX lower third reaching reserves forecasted trading cutout likely per forecasted last trading as for not did robust between in a range hundredweight. contributed met Pork increase per dropping a in forecast, China, forecasted $XXX behavior, production range were the and $XX below $XXX the in the quarter, our Hog exhibited highs and Belly Trim similar per the

beginning extreme for fourth the The through in markets fever. exact and in Asia, past with clearly potential supplies China, for being fundamentals in pork manage still the expectations. regions the are a impact swine The third inputs quarter Southeast due high deliver as line uncertain. results to African and for soon commodity of The cost assumes our timing magnitude support overall with demonstrated Europe in quarter. quarter like our Hog experienced to fourth as higher pork in quarter in markets the prices remains we The ability guidance our teams’ volatility key volatility now sustained to affected. environment

on We assumptions of and call. XXXX outlook detailed the provide for a view will November fiscal market the

making Orion significant One and on Project progress Supply our Chain are We initiative.

we X our example, are coming basis, major of in business team in months. two over million is Project XXXX. grocery more similar we For Orion The centers save chain the on opening distribution On savings implementing the new this process miles combined will will in phases and during for HR, focused supply unlock related to to finance, cost alone. opportunities project. fiscal a

Operator the the At and this answer portion to of the time, over question I’ll turn the call call. for


instructions] [Operator

We’ll Oppenheimer. first from with take Rupesh Parikh our question

Erica Eiler

on Thanks actually questions. Good morning. a for for is Eiler taking lot Rupesh. our Erica This

what at the look we this hoping run how as First, rate driving nearly expense that about understand to just XX% here, performance you’re was I expense and down thinking what’s ex-CytoSport, opportunities better quarter, going SG&A SG&A forward. the was

Jim Sheehan

quarter of lower generally that was in the will the be year primarily Good morning. sale. We of last think run CytoSport than rate the fourth it because

Erica Eiler

from swine should helpful. pieces a Any ’XX business, any to takes be given just are would thinking puts Then moving Jennie-O, thoughts provide early be if Okay. lot can or Skippy, there juncture. at on your you fiscal wondering fever, African CytoSport this of about in we

Jim Snee

food us the remain longer many pressure and positive could retail. have Yes, it given insight-led to is some brand seen markets, about quarter XXXX had the their their long Grocery growth. on we but continues well but service, for uncertainty some deli, we’ve demonstrated have of volatile the term the we of the input all in products, different and very ability, in I and as term positioned many, story refrigerated innovation although early poised we the the across business with for segments, think of volatility the we be they’ve ability markets that to avocadoes, and in think grow there foods brands, noise course

JOTS prepared get progress, in to as do the is I some my had the to wins We we think to and stabilized back into do comments. in need growth. but recovery expect over be business to well XXXX. we now a We’ve small said work continues spill

very obviously developed accommodate have, business swine We pricing Skippy African uncertainty any and fever like input Spam China. and we’re to reflect but the and optimistic we’ve we then can in tariffs, of we that a on have based the we wild about costs the feel International also that businesses are is strong. card, that

balance we so poised strong are has to with Then a any finish business M&A. for sheet, our about conversation

to to the uncertainty long always the ability of early But for the when XXXX acquisitions but right. given grow marketplace, it’s term. We’re ready is we are make the some in time in over our confident

Erica Eiler

great, so that’s Okay Thank helpful. much. you


Next we’ll Stephens go Inc. to Ben Bienvenu with

Ben Bienvenu

full good commentary for said want range. to sales about on be is guidance you a guidance your the to XQ that year clarifier Would you guidance sales of morning. Thank the expect towards guidance year. the The EPS I wide. quite ask earnings the Jim, question this end guidance? expect to you, you for reflect lower

Jim Snee

that’s No, assumption, Ben. think I don’t fair a

not we I we competitive is in think positions. from markets thought, it line sure we’re perspective, the and way pricing, in did materialize the comments, realign as did quarter how mentioned prepared a top very the that to as make pricing remained we we

one is guidance. think from it the I and earnings is guidance different sales thing the

Ben Bienvenu

you about particularly using place you several trade follow-up over A as great. about are how versus actual to reduce volatile months? help spend an you costs think Okay, the on reductions, price the think the increases been Can promotion us environment where pricing. pricing they’ve that input in in had last list as put

Jim Snee

trade them to make that of where to a the dollars our that’s to move different The is organization that dollars about engage over shelf customer interesting on basis. solution optimal by around of last price it thing retailer, sure willing do net the important base. to is we’ve retailer customer or closely, trade make quarters, to depending is course, but it what for talked We needs promotional sure and unique situation, is but the the is how about again several on customers decision. a properly priced the reflective customer their direct invest and with selling to that understand by We we’ve dollars work we’re be, the it got

Ben Bienvenu

Okay, thanks.


with to Next Research we’ll Heather go Heather LLC. Jones Jones

Heather Jones

of which for capacity us XXXX you could question. flow, go was just segments a could portions have cash. that out Just back taking the wondering cash you material, material you quarter? made if Good the talking that about practical you you any help morning building cover it raw about that comment flesh more and more, limitations. materials, build to more. to are is were you wondering substantial if I think thanks inventories I of wanted I or to raw mean, I raw to use do and limited understand a could

Jim Sheehan

Certainly. refrigerated, trends as believe commodities the international at we build to you and The there finished Yes, limits? take there’s selectively certain a a we Are inventory’s supply build in look GP that really in being take going place the to We certain goods. and are inventory. limit how much areas. built can and

Heather Jones

My on you. question thank next Okay, Jennie-O. is

mentioned broader to into your the so, XXXX. of You distribution, into is would to recovery of only have how lag get the a over to to or that to on or assume be that over you long lock anticipation regain spill distribution? think somewhat I I Jennie-O in we In going the have or year so. price. regain for that sense year the you efforts a kind would be with sharper is you wondering, was recovering Basically, do trying see protein what could I’m pricing next to markets would

Jim Snee

does we as said, think distribution a issue. remain Heather, this I

distribution Our velocities very where in strong. remain we’re

had effectiveness said remarks, some we we’ll so I are gaining momentum. We’ve before markets opportunity expanding. the in evaluate and have the We have to in advertising some small select on wins, turned as my prepared

that have be experienced from mentioned it’s prepared also mid-XXXX. but about still to take that leaders of the business, going sales I it, it’s as in we parts in some marketing probably so organization we’re to my going thinking remarks really time, additional and other brought to jumpstart

is to feel to is that - regain investments made investments are have really, to make this distribution, back business that those be to growth. some big us get You’re we’re we time the it stabilized there is right this business for to and prepared like but do thing and

Heather Jones

Okay, thank you much. so


Goldman Samuelson go Sachs. to with Next we’ll Adam

Adam Samuelson

Good thanks. everyone. morning Yes,

low I Jim, just but you the understand the Presumably lower that that necessarily little raw the it sales the the end appreciate into wide outcomes in the of high don’t a laid you’ve costs, earnings range, me just a out align and range. is fourth end me but side. quarter, get bigger of earnings range outlook outcomes variable on and the the help think for bit digging the is the at the pork Just about range more of of the range towards material outlook. your help comments

Jim Snee


with you head, false on comes that Adam category the the we as of does the right in elasticity moves. had that’s that it If - pricing some hit all that impact course You get pricing costs. create and know, could will as is we additional it does along we’ll like and the that term pricing positives quarter, about do, problematic, input costs, costs, leaders, with input we input be But second the margin know pricing run-up our aggressive but it but be in what that compression. we lag short the the

You’ve range, driver warranted - do and range to quarter. the some that that in primary on believe it the hit is is that given third head the going the seen for of right that the be we we’ve volatility

Adam Samuelson

understand little input a your much digging actually then on how about how basis savings to initiatives, benefiting in and exiting hoping more, or basis, can on you like, on bit much or net some Project they’re XXXX material the we I the control. benefited net potential Maybe quantify Okay. a the run of year the before XXXX chain to supply was XXXX sales what a things a think those view? your layer raw into cost quarter rate looks are on that specifically into Orion

Jim Snee

to Applegate hitting business, from it’s belly be earlier If the all the with Sure. about XXXX service retail business comments retail on Hormel the continues retail my We a starting business, feel whether the cylinders. business. really to our back the outlook, business, go segments, food good we

result about expect some could run them. that as we on but been noise, margin to really of that We nice and refrigerated that all has short term compression foods know input continue. optimistic that a costs, of there be a We’re of

ability do building through us have that to in on work probably in, avocado brand some promotion products, and we’ll our will good the control, do a we’re outside has and but that the the read advertising of do done products. building We We Grocery control innovation, feel make give coming is brands crop that, sure with been there. to we’ll that that team costs better favorable and center-of-the-store continue has brand our there that’s really that around impressive. about That’s that. input our some relief grocery more really, what’s think

are run what and control Probably one the fourth most get ability it JOTS our distribution Part to China, Then going the market the in in done, and the of and our African control our going will the that be is that international, gains. or with global there but got business, to and execute tariffs the to execute swine continue happens in into in our control trade to business some outside to our that’s of on fever really piece be done our impacts. with be is to We’ve get XXXX. uncertainty. based ability quarter

in Jim of we’ve XXXX that that that, supply corresponding million. a we’re our products but $XX for this savings got fact us From going and DC of get outlook gave a to not referenced a new opening number we’re year, save the We the will We’ve X perspective, is with chain had into benefit. there miles, success million financial lot projects. Sheehan’s we comments grocery that lot a to the committed the

network, we’ve view plant foods for of global and We’re refrigerated had a better our evaluating performance.

benefits Supply but over So next Orion, Project to our a the seen and that of not continue that we’ve there is only expect One from years. Chain we lot several

Adam Samuelson

or projects this one timing follow-up, If the year, for also project the I $XXX really allusion was How down? there it of could comes goes actual million sneak I think was just changes. reduction, that, there’s capex scope a in reduction cost year of the to but much the versus next programs quick some

Jim Snee

commitment. everyone that some not so that of going big very in But a back. on of expenses shifted to spring is I a is that’s and one timing. here know we’ve had really there those midwest the a the Burke, lack at We project want majority of wet thing is got The

as it’s Our been. our ever spending as in investing is value-added capex to business commitment strong and

Adam Samuelson

Okay, the color. I appreciate Thanks.


the it’s reminder, and gentlemen, ladies join to keypad. a one on your telephone As star, queue

Eric we’ll go Group. Research to Buckingham Next, with Larson

Eric Larson

question. Thanks anticipated again Good of as can some Either not? for is a farmers XX what’s be dynamics lot prices lean July, that and We’ve going out Do you have we’ve everyone. been What you because well, got sharply on? recently, hog market, particularly the the meal there Jim volatility in the My a expansion ASF? next with back of as this ASF the think be of seen or lot see herd think? morning for and of etc., answer might supplies we and taking on there’s soybean down question hog mentality that the question. corn months, do expansion pricing. see Obviously well, but my might June what you for happened hog industry

Jim Sheehan

driver additional online. think are think the that or of probably us. in about probably expectations and encouragements increase were, so production. to now, react, right coming was years processing $XX. time There’s some hogs are capacity those that see certainly it two additional the a cost to they’ve that reaction been with increased do as industry line is a but the low We to now, a had basis I think I production. at It’s the there’s available They’ve of to capacity input. that’s hogs the their what today right there are I hog cheap hog capacity discussion said- more cheap about Well, biggest They’re is in the grain input, and anticipating relatively increasing, you

Eric Larson

thought it’s what supply that so project, way into multi-year broader a year. something talk efforts. It’s be, are follow-up, your savings Mr. about supply multi-year is can getting would a you chain there just might you your try to a Then to this Snee--Jim, you to your be what is quantify comments, project, Okay. quantified you’ve or this a in position a specifics, about chain Without that that?

Jim Snee

when fourth a obviously more we think our quarter give little get I into color clarity. and we’ll call,

reveal permanent if other the more continue about of know this will part This have down The I part, a as couple would multi-year don’t even it with we’ve that have opportunities I to variable Orion, project. we that the a specific I being we needed. a But in project, we’ll Project structure themselves. permanent examples. a that refer organization as our is cited a path

and think to have come of about training some one Chain standard initiative just environment view how recruitment plant so in of we harder even we’re prepared better utilization, things of how global to As ever performance, where the of organization been that are doing better that workers Supply and we impressive having than an important to softer fronts. about by, meat in different on the One approach far the the we’re it’s very number a things, reaching benefits and have approach

Eric Larson

you. thank Okay,


Next Robert Moskow to we’ll go Suisse. with Credit

Robert Moskow

in are price A all couple that May, you Hi, still the pricing thanks. in or any reversed increases took questions. The they market? now is there residue that of

Jim Snee

category. good on really It depends the morning. Rob, Hey

what pricing about has now times down realign up. that’s we’ve but think have competitive. we we do realignment moved itself to to that back bacon, know happened seen that what more run for taken and remain frequently, tend in has talked, does last a another of market example, It you so If we to since couple the

the that pricing market of the trim front, inflationary did today. grocery raw took and measures. do, really more pricing at terms took, that to not that what pepperoni, realigned because we In our material, related low the was was we Spam that was but we products On all there going other less thought held, sustain remains it to

the but corresponding about feel pricing and took good mixed been different really it’s categories, bag we the realignments. across actions the we So a

Robert Moskow

quarter, XX% don’t Got it. Then time. a in dip follow-up a - the margins I grocery remember seen division, the I the below haven’t last

is to avocadoes? September Like hey higher? that, an and quickly big margin that hurting why of here a around transitory margins will the as and related we why the the you’re in wasn’t quarter suddenly crop adjust of second forward, assume this look crop degree, the and then first in for it normal crop is how of can hinting availability kind that, we I think a availability this lot it but all issue to

Jim Snee

That’s a great question.

we QX, crop position what with GP a situation our a to going supply in an secondary if if were margin in pricing, very to like. time and go XXXX back, situation you that time, similar At you in we our back to XXXX. very thought the overall primarily next crop not structure, on to we wait had looks aggressive see but were we The impacts and and better this be just re-evaluated go

Early that’s a will are that secondary and primary we us impacts get more that QX, in QX QX favorable, this crop. so in early in but we’ll the So and then have impact again impact better to primarily start indications QX crop read then have primary QX. some in the on

Robert Moskow

That’s very question number I’m so It’s helpful. August, three, Okay. to here. ask going

Project chain that You supply productivity. more be efforts, think the I also Can as finance, you I talked and well that; evaluating mentioned means? but as HR, you as where chain what supply be get specific about more and Orion on areas you’ll

Jim Sheehan


operated great will of common all chain, the platform. ERP all be operations efficiencies the implementing HR, be a that supply We a will across in single We’ll on and instance of create finance, systems meaning our operations.

is company the make Project that It’s The to decisions common and will a certain and that the multiple that us on things before will within quality brings across Where obviously many analysis Orion a business. automation available those efficient We’re systems have to mine in through issue going aspects information aspects, also the of and all processes, are focusing and this more we do we on information, data. other can so to to us. robotics can information platform. of be make get readily provide we’d the based

Robert Moskow

you. thank good, Very


it’s keypad. ladies again to your a question, one and on gentlemen, telephone Once ask star,

Morgan. with Palmer Thomas to go JP we’ll Next

Thomas Palmer

for Thanks little more about potentially does were severe increases products. price you morning. think give was first a the the price line elasticity pork that the because coming with of you Was you and year? you it saw in the you Wanted Do Good off industry, that talking what kick layering out on new questions. to you on think as as about expected? insights it

Jim Snee

that was of basis, continuous markets points market the thought, we were and so the in in pepperoni. into the markets and some the really that put realignment did higher so higher and trim expected elasticities. we action of We pricing that That’s pricing we created didn’t saw category, on where didn’t, not perform category some pricing, was on changed What especially those which priced front. elasticity when the market in. greater a others fact reached the bacon belly than really we the us than than the then elevation came took happened in It the our sustain,

bit the back a up held products felt the volume little were perspective, so grocery Once with about pricing we elasticities got that were on then Bacon X%, Spam. if flat we expected what we pricing expected. think in is, our we did and sales we is we track, realigned, we Spam’s like pepperoni elasticity talk anything, with and was relatively outperformed that From the line

across So of categories as I different said bag earlier, a it mixed we pricing. was really the all where took

Thomas Palmer

like think you sounds in least severe the on you is I of temporary. pricing Okay, to side. to at It just experiencing avocado you’re take inflation thanks a elected this portion not for that part because wanted that. circle

to quarter either see changing timing Is come COGS fourth do COGS in that would both you does a it new crop standpoint as the implement through, is decide pricing? the long in When does or terms P&L early materialize or than of that? favorable for basket and the impact how pricing that quarter you If we get crop, different start from take the the the to read not? this is the first

Jim Snee

it. Got

to The and be would either it to to dynamics see if retail days do expect pricing quarter, quarter XX we’ll will right really choose the with end business pricing the expect take approximately and the a fourth the marketplace. perspective, pretty order, pricing, of consistent tail to other a take way. we first to get read it’s the very into team You make on we see into From able it in short that have good decision. impact

Thomas Palmer


you. Thank


Morningstar. we’ll Scheuneman Next Rebecca go with to

Rebecca Scheuneman

sale the about margin Was part that any entirely peanut is to CytoSport pricing? butter grocery question avocadoes there can and margin. a products business, that or explained be have I of there of attributed decline the the by the morning. Good

Jim Sheehan

it’s really the butter. prices From and standpoint, about avocado a peanut margin the

Rebecca Scheuneman

from all CytoSport? at nothing so Okay,

Jim Sheehan


butter. and from the half but have a avocado impact stated, P&L margins, about we’ve year $X.XX standpoint, CytoSport back really from peanut the a the driven costs As for of would it’s by the

Jim Snee

that we Yes, businesses existing have. the

Rebecca Scheuneman

Okay, improve there this question to is from global wouldn’t heading thanks. second shortage believe this ASF, My with reason into protein turkey for is that resulting any the demand next year?

Jim Snee

do this and and think reorganizes, the supply could see of a but view plays the see global that We through I think in says out this products, trade turkey there there point We’ll that how assumption. fair I how to that’s but need all is materializes of I balance assumption. particular, XXXX, year that’s a this into a fair uncertainty how out poultry think benefit. global

Rebecca Scheuneman

you so great. Thank much. Okay,


[Operator Instructions]

no have we for turn call show additional speakers or questions. closing I’ll back to our further over comments now the remarks. I any

Jim Snee

to Great, you this of all interest your participation thank you. Thanks morning. for and

to Have manner. navigate to very certain key results uncertainty, you. our term Thank ability very in deliver I XXXX great remain continues in team our a While our strong finish a day. near teams’ and


That does your for thank conclude today’s you conference. participation. We

may now disconnect. You